Italy Brings Forward Budget Plans as Crisis Mounts

Amid crisis in the Eurozone, italy's credit rating was slashed last week - Spain suffered a similar fate on Friday. Italian Prime Minister Silvio Berlusconi said the decision was expected. Photo: Reuters

Prime Minister Silvio Berlusconi pledged on Friday to bring forward austerity measures and bring Italy's budget into balance by 2013, a year ahead of the original plan, in a bid to stem rising turmoil on world markets.

Speaking at a hastily called news conference after a day of calls with world leaders including German Chancellor Angela Merkel and U.S. Treasury Secretary Tim Geithner, Berlusconi said the government would move ahead more quickly with budget plans.

"We consider it appropriate to introduce an acceleration of the measures which we introduced recently in the fiscal planning law to give us the possibility of reaching our objective of balancing the budget early, by 2013 instead of 2014," he said.

Italy's government bonds and shares have been sold heavily in recent weeks as the country has become embroiled in the euro zone debt crisis after doubts about its ability to control a public debt burden which is among the highest in the world.